In the past couple years, global Internet media company Yahoo (YHOO) has made more headlines than Lindsay Lohan.
From restructurings to corporate raider attacks, a new CEO, an expansion in New York City and the $1.1 billion acquisition of Tumblr, it has been enough to make even the most astute trader ask for a pause.
If we consider the below multiyear chart that spans back to 2006, YHOO’s strong rally since September 2012 has certainly brought some life back into a stock that couldn’t get out of its own way in recent years.
Even so, Yahoo has so far “only” retraced roughly 50% of the slide from the early 2006 highs down to the late 2008 lows. Given the long basing period from 2008 through most of 2012, the stock should — from this longer-term perspective — now be in a position to work nicely higher still over coming years.
More near-term, Yahoo has risen higher by almost 33% year-to-date in a move that while orderly (i.e. with a series of consolidation periods and subsequent rallies), most likely is also too steep to sustain at this rate. After a series of sideways chop and indecision candles during the past two weeks of trading, Yahoo this morning gapped down below lateral mini support near $26.50 and now looks to have room down to its 50-day simple moving average (yellow line) currently around $24.50.
Alert traders would have noted as a first sign of caution that YHOO lost upside momentum in recent trading days, indicated by the negative divergence that the Stochatics momentum oscillator.
This, coupled with today’s drop below initial support, should let the stock fall a little longer before better support near $24.50.